Sears, Whirlpool ask SCOTUS to eviscerate consumer class actions

September 6, 2013

Millions of American consumers over the last decade purchased high-end, front-loading washing machines with an unfortunate propensity to develop a moldy odor. The vast majority of those machines didn’t end up emitting the objectionable scent, or, at least, not noticeably enough to prompt their owners to register complaints with manufacturers and sellers of the machines. Nevertheless, lawyers representing washing machine buyers all over the country sued Whirlpool and other manufacturers in dozens of class actions claiming violations of various state consumer statutes. One of those consolidated cases, involving 10 class actions comprising about 4 million purchasers of Whirlpool washing machines, is one of the biggest class proceedings in American history. Consumers say – and appellate judges in two federal circuits agree – that they’re entitled to a classwide determination of whether the washing machines were defectively designed. Manufacturers, on the other hand, contend it’s impossible to lump consumers into classes because their individual experiences with the machines vary too widely.

When the U.S. Supreme Court opens its next term in October, one of the justices’ critical decisions will be whether to grant review of one or more of the three defective-washer cases that will be before them. Two of those cases have already attracted the high court’s attention. Last spring, it vacated class certification rulings from the 6th and 7th Circuit Courts of Appeal, asking the appellate judges to reconsider their rulings in light of the Supreme Court’s holding in Comcast v. Behrend. Over the summer, both the 6th and 7th Circuits recertified consumer classes, despite Comcast. Now, in an amicus brief in a third moldy-washer case before the Supreme Court, Sears and Whirlpool are arguing that under the reasoning the 6th and 7th Circuits used in those recertification opinions, there are virtually no limits on product liability class actions. Unless the justices take action, according to Sears and Whirlpool, American businesses face enormous new exposure to claims by consumers, including buyers who haven’t even suffered any ill effects.

The primary purpose of the amicus brief, which was filed last Friday by Mayer Brown as counsel of record for both Sears and Whirlpool, is to ask the Supreme Court to delay acting on a petition for certiorari by BSH Home Appliances, which sells Bosch and Siemens washers with an alleged mold problem similar to that of Whirlpool’s machines. In the BSH case, the 9th Circuit declined to review the trial court’s grant of certification to four statewide consumer classes. BSH’s lawyers at Jones Day want the Supreme Court to take up their case to determine not just whether a class can be certified without a classwide showing of injury but also whether the trial court erred in curtailing BSH’s challenge to the theories of the consumers’ experts. In their amicus brief, Sears and Whirlpool argue that their cases present a more appropriate vehicle for deciding the first (and more sweeping) question because they have detailed appellate records, including the 6th and 7th Circuit consideration of the impact of last spring’s Comcast ruling on consumer class certification.

That consideration, according to Sears and Whirlpool, shows appellate panels deliberately defying the Supreme Court’s limitations on class actions. In Comcast, as you probably recall, the Supreme Court majority held that to win class certification, plaintiffs must show that their individual damages are measurable on a classwide basis through the use of a common methodology. Sears and Whirlpool claim there’s no way that the moldy-washer cases meet the Comcast standard, considering that the classes would include a mishmash of consumers, many of whom never alleged that their machines emitted an odor and now assert only that they overpaid for a supposedly defective product.

The amicus brief argues that instead of applying Comcast as they were instructed to do by the Supreme Court, the 6th and 7th Circuits devised improper rationales to keep the moldy-washer class actions alive. According to Mayer Brown, a two-judge panel of the 6th Circuit erroneously wielded the U.S. Supreme Court’s ruling last term in a securities class action, Amgen v. Connecticut Retirement Plans, when it recertified a bellwether class of 200,000 Ohio purchasers of Whirlpool washers. “The court of appeals glossed over a host of individualized issues that would predominate at trial – including key issues of causation and injury – by misconstruing applicable state law, manipulating the level of generality at which the issues were described, and failing to acknowledge, much less resolve, disputes as to facts critical to the Rule 23 inquiry,” the brief said.

Sears and Whirlpool said the 6th Circuit opinion is “rife with outcome-determinative legal errors, including rulings flatly inconsistent with this court’s precedents.” It implies that the 7th Circuit opinion – written by Judge Richard Posner, who (as I’ve noted) seems to revel in conflict with Comcast author Justice Antonin Scalia – is even more problematic because it ignores the rules of class actions. Posner, according to the amicus brief, focused on the potential efficiencies of using a class action to decide whether the design of washers sold by Sears was inherently defective and, despite Comcast, minimized the complications of determining damages for consumers with a wide array of alleged injuries. The 7th Circuit’s opinion, according to the amicus brief, amounted to “judicial fiat.”

I expect we’ll be treated to more attacks on the 6th and 7th Circuit rulings when Sears and Whirlpool file their own petitions for Supreme Court review next month. Their petitions last term attracted considerable amicus support from pro-business groups such as the U.S. Chamber of Commerce, which warned of the dire consequences of consumer class actions like these. (No amici have asked the justices to grant BSH’s petition, according to the Supreme Court docket, which suggests they’re all waiting for the Sears and Whirlpool cases.) Last term, Samuel Issacharoff, a law school professor at New York University, represented the classes in both the Whirlpool and Sears cases. For the sake of a good fight, I hope he and class counsel are already working on their opposition briefs.

(Reporting by Alison Frankel)

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